The market is once again faced with one of its favorite dilemmas: are stronger economic statistics a good thing or a bad thing? Normally, there should be no doubt about the answer: it's positive. But it can also trigger events that investors perceive negatively. For example, forcing a central bank to maintain high interest rates. Or forcing a government to abandon a support plan.

Yesterday, US retail sales figures for September came in twice as strong as expected. This was all the more surprising given that many specialists thought that the sharp deterioration in credit data over the summer would undermine consumption. American households certainly seem unsinkable.

The downside of this statistic is that it has revived the prospect of another rate hike by the US central bank in the coming weeks. The yield on US Treasuries soared to 4.83% for 10 years and 5.18% for 2 years bills. The S&P 500 and Dow Jones finished almost flat, while the Nasdaq 100 lost 0.33%. The rate hike forecasts visible on the CME's FedWatch tool, a veritable barometer of stock market bookmakers, have strengthened slightly for the December deadline, but remain in the minority.

The United States isn't the only market where debate rages over how to interpret a statistic. China announced last night that its Q3 GDP and September retail sales were slightly stronger than expected. This is good news, after months of adverse statistics in the country. But here again, there's a problem. If the economy picks up, won't Beijing give up on the big recovery plan that investors have been waiting for, but which is never coming? Oh dear, another dilemma! As it happens, the Chinese indices rose overnight, before deflating like pancakes. It has to be said that, at the same time, local property group Country Garden Holding was clearly unable to meet a deadline that had already been extended. As I wrote yesterday, I don't understand much about Chinese real estate any more, and I'm obviously not the only one, judging by the investment bankers' comments I've read here and there.

Elsewhere, the situation in the Middle East is worsening after a bombardment hit a hospital in Gaza, killing hundreds. Hamas blamed the strike on Israel, which defended itself by claiming that it was a rocket fired from Gaza that missed its target. In any case, this event has profoundly changed the situation ahead of Joe Biden's arrival in the Hebrew state today. Jordan has already cancelled the meeting scheduled in Amman between the American president and Arab leaders. Biden arrives in a powder keg, and those familiar with American foreign policy point out that his task is far from straightforward and a risky one for the occupant of the White House. This uncertainty pushed futures further in the red this morning.

On the corporate front, the earnings calendar has been swelling since last night: Omnicom, United Airlines, Adidas, ASML, ABB and Lockheed Martin have already posted their results. The market awaits Tesla, the first of the "Magnificent Seven", after the close.

Economic highlights of the day:

September inflation figures for the UK and the Eurozone, US building permits and housing starts, as well as DOE crude oil inventories are on the agenda. 

The dollar is trading at EUR 0.9476 and GBP 0.8208. The ounce of gold breaks through a new barrier at USD 1947. Oil rallies, with North Sea Brent at USD 91.31 a barrel and US light crude WTI at USD 88.06. The yield on 10-year US debt rises to 4.83%. Bitcoin trades at USD 28,502.

In corporate news:

  • Nvidia could be forced to move certain operations out of countries that fall within the scope of U.S. export restrictions.
  • Foxconn, the world's largest electronics manufacturer, will build a new type of data center using Nvidia chips and software for a range of projects, including artificial intelligence and autonomous cars, the two companies said on Wednesday.
  • Amazon.com will become a customer of Microsoft office productivity tools, in a deal worth more than $1 billion, the Insider news site reported Tuesday.
  • United Airlines lowered its fourth-quarter earnings forecast on Tuesday due to higher costs, sending its shares down more than 4% after the close. Adjusted earnings per share are expected to come in at between $1.50 and $1.80 for the quarter ending December, against consensus expectations of $2.06, and below the $2.46 per share a year ago. AMERICAN AIRLINES down 1.3%, DELTA AIR LINES down 1.0% in the wake of results.
  • Canada will take steps in the coming weeks to alleviate the housing shortage exacerbated by Airbnb and other short-term rental platforms, Finance Minister Chrystia Freeland said Tuesday.
  • Activist investor Carl Icahn has filed a lawsuit against genetic testing company Illumina, accusing it of breaching its fiduciary duties, according to a copy of the complaint seen Tuesday. The complaint relates to Illumina's acquisition of cancer test manufacturer Grail.
  • Elevance Health reported on Wednesday a charge of nearly $700 million for job cuts and impairments in the third quarter. Excluding these items, the company posted earnings of $8.99 per share, ahead of analysts' estimates of $8.44 per share.
  • Interactive Brokers - The online broker fell by 3.2% in pre-market trading, even though third-quarter results were above consensus estimates. The company reported adjusted earnings per share of $1.55 and sales of $1.15 billion, against estimates of $1.51 and $1.11 billion.

Analyst recommendations:

  • Align technology: Piper Sandler & Co maintains its overweight recommendation with a price target reduced from USD 415 to USD 370.
  • Allstate: Morningstar downgrades to hold from buy with a target price of USD 122.
  • Apple inc: Haitong International Research Ltd maintains its neutral recommendation with a target price of USD 186.
  • Copart: Baptista Research maintains its underperform recommendation with a target price of USD 39.10.
  • Crowdstrike: DZ Bank AG Research initiates a buy recommendation with a target price of USD 215.
  • Dexcom: Morningstar upgrades to hold from sell with a target price of USD 92.
  • Expedia: Baptista Research initiates a buy recommendation with a target price of USD 128.70.
  • Fortinet: BMO Capital Markets maintains its market perform recommendation with a price target reduced from USD 72 to USD 64.
  • Globalfoundries: Baptista Research upgrades to buy from hold with a price target raised from USD 72.10 to USD 79.20.
  • M&g plc: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from GBP 2.10 to GBP 2.30.
  • Ocado group plc: HSBC downgrades its recommendation to reduce and lowers the target price from GBP 5.45 to GBP 4.15.
  • Palo alto networ: BMO Capital Markets maintains its outperform rating and raises the target price from USD 275 to USD 300.
  • Phoenix group ho: BNP Paribas Exane upgrades to outperform from neutral with a price target reduced from GBX 640 to GBX 560.
  • Prologis: Morningstar upgrades to buy from hold with a target price of USD 124.
  • S&p global: Baptista Research maintains its hold recommendation with a target price of USD 402.90.
  • Spirax-sarco eng: Numis upgrades to add from buy with a price target reduced from GBX 11000 to GBX 9500.
  • St. james's place: HSBC downgrades to hold from buy with a price target reduced from GBP 11.25 to GBP 7.50.
  • Synopsys inc: Deutsche Bank maintains its buy recommendation and raises the target price from USD 465 to USD 585.
  • Zscaler: BMO Capital Markets maintains its outperform rating and raises the target price from USD 180 to USD 195.